Eiji Toyoda

Eiji Toyoda smiles as he recalls the early days: When I went to Detroit in 1950, we were producing 40 cars a day. Ford was making 8,000 units, a 200-times difference. The gap was enormous. But not all that daunting to a young Japanese engineer. Today the cherubic octogenarian, his company's retired and revered elder, contemplates a global firm that makes cars in 24 countries and sells $90 billion worth of them in 160 countries. Moreover, the way the company makes cars has turned the world's automotive industry on its ear. Toyota Motor Corp. (the family name was slightly amended for use as a corporate moniker) is the most efficient carmaker in the world. Getting there has had a lot to do with the talents of a remarkable man and a family with resourcefulness in its genes. Eiji Toyoda says he grew up, literally, inside his father's textile mill in western Japan, near Nagoya. So from childhood, he recalled in his 1987 memoir Fifty Years in Motion, machines and business were always there right in front of me. I probably developed an understanding of both. The textile business was built on the ingenuity of Eiji's uncle Rashomon Sakichi Toyoda, an impatient, chain-smoking carpenter and inventor. Sakichi used his woodworking skills to build textile looms, perfecting a model in 1898 that automatically stopped if a thread broke, thus freeing an operator to oversee several looms at once. When the British textile machinery maker Platt Bros. in 1929 paid Toyoda £100,000 for the rights to Sakichi's latest loom, he earmarked it for a venture that would make automobiles. Ford and General Motors were already assembling passenger cars in Osaka and Yokohama, and Sakichi challenged his eldest son Kiichiro--Eiji's cousin--to build a Japanese car with Japanese hands. Sakichi did not live to see it happen, but before he died he made sure his favorite nephew Eiji, 18 years younger than Kiichiro, went off to university to study engineering. Kiichiro set up the automotive department at Toyoda Automatic Loom Works in 1933, as Eiji was entering Tokyo Imperial University. Within a year the first engine was built, a Chevrolet copy so exact it could accept genuine Chevy parts. By the time Eiji received his mechanical engineering degree in 1936, Kiichiro was developing the system now known as lean manufacturing. He reasoned that the company could save money if parts and components could be delivered to the assembly line just in time to be installed on the car being built. He also changed the traditional physical layout of the plant so that machine tools were grouped along the flow of production. That made the supply line shorter and meant parts could get into the assembly process sooner. He then began convincing suppliers to cooperate in his just-in-time system. Eiji's first assignment was to run the company lab in Tokyo, and he set about lining up mechanical and scientific specialists to join Toyota. Then he worked on the shop floor in charge of machinery and production planning. The first Toyota passenger car, styled after the Chrysler models of the day, went into production in 1936. But the Japanese government decreed that trucks were needed for Japan's military adventure in China, so Toyota's passenger car was shelved. By the time of the Pearl Harbor attack, the company was building 1,000 trucks a month. As the tide of war in the Pacific turned against Japan, however, overseas supply lines were cut and production at Toyota dwindled. Materials and parts were so short that the army ordered trucks with a single headlight and only rear-wheel brakes. On Aug. 14, 1945, the day before the war ended, American bombers destroyed a quarter of Toyota's new plant at Koromo, now called Toyota City. Eiji remembers the chill he felt when, after the war, he was shown U.S. plans for a full-scale bombing raid on Toyota scheduled for a week later. From the ruins, Kiichiro began to rebuild the company. But expecting that vehicle production would be forbidden by U.S. Occupation forces, he assigned Eiji to set up a chinaware business and sent his son Shoichiro to northern Japan to learn how to produce fish paste. But the Occupation authorities called on Toyota to build trucks and buses for an immobilized postwar population. The china and fish paste projects were abandoned, and truck orders came pouring in. Unfortunately, payments did not. Deflationary measures put into place to curb Japan's soaring prices shoved Toyota to the brink of bankruptcy. One way to ease Toyota's financial crunch was a workforce reduction, but the news that 1,600 jobs would be cut inflamed Toyota workers. Eiji remembers facing an angry crowd of several thousand, explaining that the company was in danger of sinking. Local banks also moved to save the firm. The bankers didn't want Toyota to make products it couldn't sell and get paid for. Eiji devised a plan for a new company, Toyota Motor Sales, to send orders directly to the manufacturing company, deliver the vehicles and collect payment. (The sales arm operated independently until 1981, when Eiji reintegrated both companies to form Toyota Motor Corp.) Eiji's 1950 visit to the U.S. opened his eyes to the potential of large-volume production--and eventual export to the U.S. He told colleagues he didn't see anything in the U.S. that seemed beyond Toyota's capability. Returning to Japan, he and the company's production genius, Taiichi Ohno, focused on making many cars in small batches more efficiently than the big companies could. Small supplies of parts are brought to the production line frequently, rather than having a large stockpile by the line or in a warehouse, which is now considered wasteful. They established the kanban system, in which parts and supplies are ordered as they are being used. Every Toyota worker became an inspector, and each was given the power to stop the production line if a defect was found, an echo of Sakichi's first automatic looms. Suppliers were encouraged to use that system. Eiji realized that correcting defects when they were discovered rather than copying Western methods of repairing them later would be more efficient in the long run. On New Year's Day 1955, Eiji put on his tuxedo and drove Toyota's first full-scale production model, the Crown, off the assembly line. The car was popular in transportation-starved Japan, and with an excess of enthusiasm he introduced it into the U.S. market in 1957. It was a flop, incapable of sustained freeway speeds and prone to overheating. Eiji eventually flew to the U.S. to tell his sales force to stand down temporarily. Confidence was restored in the early 1960s with the diminutive Corona and its even smaller successor the Corolla, introduced in 1966, which became one of the world's most ubiquitous cars. Eiji's further ambition was to produce a luxury car to rival Mercedes and BMW. The Lexus debuted in 1989 and immediately stole market share from established luxury models. This year, Toyota aims to sell a total of 1.5 million cars a year in the North American market, more than 60% of them made locally. The next big target is Europe, where Toyota already has a plant in Britain and will open one in France in 2001. Eiji stayed at the Toyota helm for 15 years, through the stormy battles over emission controls and U.S. demands for export restraint, which he initially opposed. A partial solution to that problem, producing cars in the U.S., turned out to be one of his most visionary decisions. We did not have an alternative, he says. My first feeling was that [in Japan] we can produce and sell the cheapest cars in the world. But I guess that was not possible. His modesty was misplaced. Were Toyoda to return to Detroit today, 50 years after his eye-opening first visit, he would have another impressive sight to gaze upon at the U.S. Automotive Hall of Fame. In 1994 he became the second Japanese after Soichiro Honda to have his visage enshrined there, alongside Henry Ford, Walter Chrysler and the other giants of what had been, for much of the 20th century, a very American industry. Ed Reingold reported on the automobile industry as chief of TIME's Tokyo and Detroit bureaus